MassRoots sues founder, former CEO, alleging “serious misconduct”

MassRoots Inc. last month jettisoned its CEO for alleged “serious misconduct” — claims of sex, drugs and misuse of funds — and last week slapped the former executive with a lawsuit, according to court documents obtained by The Cannabist.

Attorneys for MassRoots filed a Denver District Court complaint Nov. 14 against Isaac Dietrich, alleging the marijuana tech firm’s founder and former CEO violated the terms of his separation agreement by enriching himself to the tune of more than $250,000 and then publicly disparaged the company after his termination.

In the complaint, the Denver-based company also reveals the reasons behind Dietrich’s sudden departure on Oct. 16: allegations of “serious misconduct,” including “illegal drug use at the workplace, improper sexual activities involving the workplace, and misappropriation and misuse of company funds,” according to the court filing.

A day after MassRoots terminated his employment, Dietrich signed a separation agreement that company officials claim had stipulations outlining “non-disparagement” and a three-year “standstill” period, which prevents him from acquiring more shares or influencing tender offers related to the company.

Dietrich violated those claims when he was interviewed by Marijuana Business Daily for a Nov. 9 article in which he said he was considering calling a shareholder vote to oust MassRoots’ board of directors, MassRoots alleged.

“As a direct and proximate result of Dietrich’s breaches of the separation agreement, MassRoots has sustained substantial damages, including those resulting from diminution in its market value since the publication of Dietrich’s disparaging statements in violation of Sections 9 and 10 of the separation agreement,” MassRoots’ attorney wrote in the complaint.

Separately, the company claims that Dietrich paid himself and others without authorization in various amounts totaling upward of $250,000. Such payments would have needed to be approved by the board of directors, attorneys wrote in the lawsuit.

Dietrich, when reached Monday, denied the allegations, saying they’re “completely not true and not founded by any facts.”

“This baseless lawsuit is meant to scare me into not filing the proxy, which the board knows they will (lose),” he said in a follow-up emailed statement. “It was filed on the same day the board approved our 10-Q (third-quarter earnings filing), which had no mention of any of these allegations.

“Shareholders see right through this lawsuit and this board is about to be ousted by a wide margin.”

MassRoots’ interim CEO Scott Kveton, the company’s attorneys, and board members could not be immediately reached for comment.

Alicia Wallace joined The Cannabist in July 2016, covering national marijuana policy and business. In her 14 years as a business news reporter, her coverage has spanned topics such as the economy, natural foods, airlines, biotech, retail,…